The following comments and typical answers are more useful if you have a printed copy of the questionnaire to use as a reference.
The FFII has analysed the consultation procedure and questionnaire, and provides:
- An in-depth analysis of the problems with the current patent system, since we consider this information to be essential for anyone who wishes to understand and answer the questionnaire usefully.
Comments and analysis on each section of the questionnaire.
Typical answers that we have helped SMEs to write for the questionnaire. You may use these as the basis for your own answers, but we hope you will express your own opinion (as long as it is factually correct, it will have a better impact than a standard answer).
Section 1 - Basic Principles and Features
The Commission talks about maintaining some kind of balance between the interests of the users of the patent system on one hand, and society on the other hand. The problem with this starting point is that patent law is not about a balance between patent holders and the rest of society when it comes to substantive rules (patent design).
Interests of patent holders only exist once a patent system is put in place. There are no interests prior to the patent system's existence, otherwise "a natural rights" teaching is assumed (where inventors have a natural or inherent right to a monopoly because of the work they did). Such a natural rights theory is not accepted by law scholars nor economists as far as the patent system is concerned (to a certain extent it is in copyright).
This part of the questionnaire is centered around the design of patent law, or substantive rules (why have patent system, what can be patented). The balancing only comes in later, at the application level: after you have decided you want patents and where you want them, then the balancing can be used to fine tune everything (e.g. exceptions for interoperability, competition policy, public health etc).
The patent system is a public incentive system. Interests of the "users" are secondary. Primary are public policy objectives, i.e. promoting innovation whatever the lawmaker decides. In other words, the general interest of all society must always take precedence over the rights granted to patent holders.
If this cannot be guaranteed, the patent system damages innovation, prevents sharing of technological knowledge, harms the business environment, and obstructs free and open competition.
The European Patent Convention Art 52 sets clear substantive rules on the scope of patentability, but the European Patent Organisation's Technical Boards of Appeal (EPO TBAs) have blurred these substantive rules with their own inventions of terms such as "technical contribution" and "further technical effect". These TBA teachings are not followed by many national courts and this results in legal uncertainty, since patents granted by the EPO are not necessarily enforceable in all EPO member states.
Where the EPO TBA has exceeded its competences in order to widen the scope of patentability, clear and precise rules have to be reset. Any decision about the scope of Patent law lies in the competence of the legislator respective to the contracting parties. The European Commission must therefore restore the EPC 52 rules and clarify them where such clarifications are needed.
A clear focus should lie on patent quality and strict definitions of what can be covered and what can not be covered by patent law.
'Balancing' the substantive rules applying to patentability can only happen if supported by an economic and social rationale. Therefore, such changes should happen under supervision of directly democratically elected bodies, so as to ensure an appropriate amount of checks and balances.
It is FFII's view that such a policy can only succeed after a fundamental and real separation of powers in the European Patent Organisation, which currently combines the legislative, executive, and judicial branches in a single organisation, creating a damaging conflict of interests. To wit, the ongoing expansion of the patent system at any cost is mainly promoted by the patent office itself, not our elected representatives.
In addition, as restriction of competition lies at the heart of the rights granted by a patent, FFII strongly supports the proposal to develop a stronger role for competition policy in the use of patents as an economic tool.
1.1 Do you agree that these are the basic features required of the patent system:
- clear substantive rules on what can and cannot be covered by patents, balancing the interests of the right holders with the overall objectives of the patent system
- transparent, cost effective and accessible processes for obtaining a patent
- predictable, rapid and inexpensive resolution of disputes between right holders and other parties
- due regard for other public policy interests such as competition (anti-trust), ethics, environment, healthcare, access to information, so as to be effective and credible within society.
1.2 Are there other features that you consider important?
1.3 How can the Community better take into account the broader public interest in developing its policy on patents?
1.1 - The most basic feature of the patent system is that we should only consider to apply it where required in order to guarantee continued or increased innovation, and prevent its expansion in areas where it is counterproductive. Substantive rules and due regard for other interests are means which can be used to guarantee this feature, but are only secondary to this goal. Only afterwards tertiary features such as costs and litigation enter the picture.
Our main concern is that there is too much focus on secondary and tertiary features at this time, which does not help if the assumed raison d'être of the patent system is ignored. For example, the definition of patentable subject matter keeps being expanded, and attempting to codify this expansion in "clear rules" (as with the software patents directive) does not help against this worrying evolution.
We therefore think that focussing on aspects of the patent system and improving these on their own is a wrong approach, and that a higher level innovation policy is required. Patent policy is only one part of such an innovation policy, and all modifications to the patent system should be done based on said innovation policy.
1.2 - The main feature of the patent system should be that the patent system itself is only a (small) feature of a larger innovation strategy. We would like to see more assurance that the mechanisms of the patent system produce "good" patents, i.e. patents which are needed by the market and by society. We would like to see clearer exclusion of subject matter for areas where patents have not been demonstrated to generate innovation.
We would like to see the burden of proof moved to those who seek to extend the patent system, rather than those who are affected by patents. We would like to see proportionality in the patent system so that highly lucrative and long-term patents cannot be claimed for innovations that are cheap to produce or for which the chance of independent rediscovery is very high. Limiting the patent system to "applied natural science", as was the case traditionally, is a good rule of the thumb to avoid such problems.
A stronger institutional role of competition policy authorities provides checks&balances to the patent system. Patents are restrictions of competition in order to achieve policy goals such as to incite innovation. The current administrative rule of the patent system does not take into account anti-competitive effects but usually sides with the interests of the users. Competition policy authorities should also get enabled to file invalidation lawsuits or oppositions against questionable patents which distort competition, esp. where affected individual market players cannot afford to oppose them (opposition market failure).
1.3 - Currently, patent policy is mainly formed by:
- The patent offices. Especially in case of the European Patent Organisation, the situation is worrying. Its Administrative Council can change the "Implementing Regulations", as well as Parts II to VIII and Part X of the European Patent Convention, thereby taking on the role of legislator. Additionally, the TBAs and EBA of the European Patent Office changed the interpretation of the EPC. These internal, not independent, chambers could do this since there never was an independent court above them. (The current discussion on extending TBA judges' terms to lifetime in order to improve their independence, clearly demonstrates their current lack of independence.)
- Civil servants with close ties to the patent system. In general, the people sitting on the EPO's Administrative Council are also involved with the member state patent offices, and are also the primary advisors to legislators regarding patent law (e.g. most of these people sit on the Council's "Working Party on Intellectual Property (Patents)" where they draft legislation, and they also advise governments how to vote on the proposals they write).
- The largest customers of the patent system, who keep trying to push the boundaries of what is patentable and what is not further and further, and even sit on the "Standing Advisory Committee" to the EPO (SAPECO). The Commission proposal of the software patents directive was also written in close cooperation with these companies and their representative organisations, without involvement of others.
The best way to take into account the public interest would be to
- Clearly separate the legislative, judiciary and executive tasks in the patent system. As a consequence, do not adopt Community law based on case law developed by an executive office with its own judiciary, which even cannot be appealed at a Community Court (because that executive office is not part of the Community).
- Move away from judicial governance to economic governance with full respect of a legislative mandate. In particular, certain decisions such as whether or not software patents should be granted, should not be seen as a legal-technical issue which can be handled by the executive or even the judiciary and consequently codified in law, but should be considered as policy decisions to be handled by the legislative powers. See e.g. the US Supreme Court, in re Musgrave, 20 November 1972 : "It may that the patent law should be extended to cover these programs, a policy matter to which we are not competent to speak."
- Open up patent policy making process to society at large as opposed to entrenched and self interested (software) patent rightsholders. Strengthen transparency of the Council working group. Strengthen oversight of competition policy authorities.
- Keep in mind that the patent system is but one tool available in innovation policy making, and one which should only be applied when appropriate and not at will ("more patents" is not the same as "more innovation", and in various situations can actually result in less innovation).
- Encourage more economic research
Section 2 - Community Patent as Priority for EU
The features we would like to see in the Community Patent are:
- An assertion of democratic control over the patent system.
- A clear and solid separation of executive, legislative, and judicial powers, in the process of defining patent law, granting patents, and handling patent litigation. There should be an EU parliamentary enquiry committee on the independence of the EPO Technical Board of Appeal (TBA) and Enlarged Board of Appeal (EBA), and the results of this committee should be the basis for using the EPO TBA case law as the basis for the Community Patent, or not.
- The restoration of the EPC article 52, and undoing of EPO TBA case law concerning said article, which has allowed the patenting of damaging software and business methods. This should be compliant for eg. with current case law in Poland which is contrary to EPO TBA concerning definition of patentable subject matter (invention and technical contribution).
Dealing with translation costs does not remove the danger of either ruinous litigation costs to small to medium enterprises, or of anti-competitive and abuse factors, which any move towards a pan-European system of patent litigation would risk enabling.
Community accession to the EPC should be based on reinforcing the clear exclusion of software and business methods from patentability rather than rewarding EPO slide, while addressing the problems of accountability and separation of powers.
According to the draft texts, Community Patents will be Community titles (Council Text, consideration 7, page 7), issued by the EPO, a non-Community organisation.
Accordingly there will be no appeal possible against granting these Community titles before a Community court (Commission proposal 126.96.36.199 page 15), or any other independent court. Further still the Community will have no influence at all on granting these Community titles and as a result, from the Community perspective, these titles are unaccountable.
The Community Patent proposal makes the EPO's Enlarged Board of Appeal the highest authority on granting practice. In turn the Community Patent Court / European Court of Justice will be the highest court in infringement / invalidity cases respectively. As a result two separate legal systems are created, allowing different interpretations of the European Patent Convention. This gives one organisation the right to grant patents, and another the right to invalidate them.
2.1 By comparison with the common political approach, are there any alternative or additional features that you believe an effective Community patent system should offer?
2.1 - The most important point is to separate the executive, legislative and judicial powers which are all currently performed by the EPO to some extent, as mentioned above. This implies that the EPO's TBAs/EBA case law must not form the basis of community law, otherwise we discard the current patent laws and their interpretations by national judges in all member states. Even the UK, whose case law is closest to the EPO's case law, is still quite a bit more strict than the EPO.
The European Community should not accede to the European Patent Convention in a way which hands over full authority on granting Community patents to a non-Community body (namely the EPO and it's TBAs and EBA). Special care has to be taken too, that accession to the EPC does not lead to Community law made by the EPO, bypassing the Community's constituting treaties, bypassing the European Commission and Parliament.
For the Netherlands and other countries, the Community Patent will also introduce retroactive liability. The Community Patent thereby will make it profitable to apply for broad, vague and trivial patents, with goal of sending out infringement notices after some years. Since going to court will often be too expensive, SMEs will have to pay. The result: the Community Patent will make legal extortion profitable.
Belgium already has retroactive liability, but for a shorter period. The currently proposed retroactive period is longer than the one in force in the US. It is ironic that abuse and extortion of this retroactive period has led to a call for reform in the US, while Europe is in danger of going even further on this point.
Section 3 - European Patent System and EPLA
The underlying assumption of this section seems to be that patent costs and the lack of cross-European patent enforcement are the principal problems to be solved. It is FFII's view that there are more serious problems with the current patent system, namely the lack of accountability of the EPO resulting in its practice of granting patents that enter domains which should not be patented, risking severe negative economic consequences.
The current national litigation process is fully compliant with the requirement for separation of powers and thus produces better case law, which has kept the EU ICT sector relatively free from harmful software patent litigation.
The only parties who are handicapped by the current national patent litigation systems are very large firms who seek patents across all EU countries. Most firms are well-treated by national patent systems and courts. We do not feel that that multinational firms represent an economic majority. To the contrary, they are typically monopolistic in tendancy and their voice must be treated as being heavily biased towards self-interests.
Any attempt to change the framework of pan-European patent litigation will have either an overall positive or negative effect on European competitiveness. On the basis of the EPOs current slide towards a US style system of unfettered software and business method patentability without true accountability, the risk to the Europe's competitiveness and the Lisbon agenda is considerable.
All appointments to any special court tasked to deal with European wide patent litigation must to be based on the principle of independence from the administrative body responsible for issuing the patents, whether at a national or European level. Therefore any draft statute which would allow current or former Technical Board of Appeal EPO judges to qualify is clearly unacceptable.
The EPO patent system must be replaced by an EU patent system. We recommend specifically that the Community should take over European Patent Organisation's legislative role. The European Patent Office should be turned into a Community Agency and in addition, a European Patent Court should be a Community court.
Taken together with the creation of a separate Community Innovation Office that would coordinate various innovation policy measures, we would protect the balance essential to the instrument of patent policy as well as Europe's competitive framework.
3.1 What advantages and disadvantages do you think that pan-European litigation arrangements as set out in the draft EPLA would have for those who use and are affected by patents?
3.2 Given the possible coexistence of three patent systems in Europe (the national, the Community and the European patent), what in your view would be the ideal patent litigation scheme in Europe?
3.1 - If the EPLA were to enforce the high-quality patents defined by EPC article 52, this could have a positive impact. If the EPLA were to enforce the EPO TBA case law (and thus enforce software and business method patents), the results would be catastrophic.
After all, the current "legal uncertainty" regarding software patents keeps various litigants at bay and is partially responsible for the absence of a US like litigation climate in Europe. This is clearly demonstrated by the fact that many software patent lawsuits are filed in the UK (Trading Technologies vs various makers of software for stock exchanges, NTP vs RiM), where case law is closest to the EPO case law.
3.2 - It should be possible to litigate a Community patent before a Community court, based on Community law made by Community legislators (and not by an unaccountable TBA or EBA of the EPO). This court should be independent of any Community or other Patent Office.
Regarding national patents, the most logical decision is to keep the possibility to have them litigated in national courts. This is convenient in terms of geography, language, and culture. Given that European Patents are more or less collections of national patents, at least the possibility to go to a national court should be kept.
The most important feature is that it must always be possible to appeal to a court which is not bound by case law of the executive (the various patent offices), since such judicial independence is a basic requirement of our justice system.
Section 4 - Approximation and Mutual Recognition of National Patents
These questions try to lay the groundwork for passing the Community Patent directive under a co-decision procedure, meaning the law would need a qualified majority in the Council, and a majority in Parliament.
The basis for this legal process would be that the current patent system acts a barrier to the free movement of goods and services within the EU.
The current problems in the European patent system have arisen not between member states but because EPO granting practice is not in line with its own rules, which national courts continue to observe.
There are areas where the current system acts as a distortion of competition, particularly where patents are used as non-tariffic trade barriers. These are areas that the competition authorities should investigate.
One or more of the following approaches, some of them suggested by members of the European Parliament, might be considered:
- Bringing the main patentability criteria of the European Patent Convention into Community law so that national courts can refer questions of interpretation to the European Court of Justice. This could include the general criteria of novelty, inventive step and industrial applicability, together with exceptions for particular subject matter and specific sectoral rules where these add value.
- More limited harmonisation picking up issues which are not specifically covered by the European Patent Convention.
- Mutual recognition by patent offices of patents granted by another EU Member State, possibly linked to an agreed quality standards framework, or "validation" by the European Patent Office, and provided the patent document is available in the original language and another language commonly used in business.
4.1 What aspects of patent law do you feel give rise to barriers to free movement or distortion of competition because of differences in law or its application in practice between Member States?
4.2 To what extent is your business affected by such differences?
4.3 What are your views on the value-added and feasibility of the different options (1) - (3) outlined above?
4.4 Are there any alternative proposals that the Commission might consider?
4.1 - Software and business method patents give rise to significant trade barriers and distortions of competition within the EU. In some member states, such as Poland, these patents are not granted and appeals to rejections based on subject matter are consistently turned down by courts. In other member states, such as the UK, granting practice and case law follows the EPO practice more closely. This puts British companies operating in Poland at a competitive disadvantage and acts as a trade barrier when Polish companies try to enter the UK market.
4.2 - Software and business method patents mean that producers and consumers of software are exposed to arbitrary litigation when they export their services to another EU country. Our business is affected in that we are unable to determine accurately whether our products and services are "legal" in other member states, so we are exposed to a significant and unmanageable risk if we decide to export.
There is also no insurance available for software patent infringement, and experience of e.g. Miller Insurance Services Ltd has shown that the reason for this is the fact that it is impossible for a company to provide a profitable insurance service in the current patent granting climate. (See: http://en.eu.ffii.org/sections/bxl0411/program/)
4.3 - We notice that the "subject matter" criterium is missing from the list in point 1. Subject matter is a critical criterium, since it is on this basis that the EPO has granted tens of thousands of software and business process patents. The three options 1-3 are all unclear with respect to the rules on subject matter, and the question of whether EPO TBAs' case law overrides the EPC and interpretations of national courts, or not.
Regarding option 3 in particular, mutual recognition by patent offices of patents granted by another EU Member State opens the possibility that applicants start to shop around to find the patent office that most readily grants their applications. The Community Patent is intended to reduce forum shopping, but this option would actually increase that problem.
A recodification of EPC 52 substantive patent law exclusions and further clarifications are needed to
- prevent the enforcement of software patents and business method patents granted by the EPO within the European Community.
- enable control of the European Union over the EPO patent pratice which will be forced to review its policy
- reinstall political governance of the patent system
4.4 - All proposals must come back to the basic question: does the system guarantee good patents, transparency, and accountability?
Further the EU has to prevent that EPC 52 exclusions will get weakened by further international substantive patent law harmonisation, trilateral diplomatic negotiations or TRIPs reform. Therefore the European Union has to make sure that parliaments may exercise their full control over diplomatic negotiations by the EU or member states.
As long as the problem with EPO software patents prevails the EU shall seek to strengthen Interoperability by legislative safeguards to indemnify affected software producers and E-Commerce.
Section 5 - General
We would appreciate your views on the general importance of the patent system to you.
Please answer the following questions on a scale of 1 to t10 (10 is very important, 1 is negligible):
5.1 How important is the patent system in Europe compared to other areas of legislation affecting your business?
5.2 Compared to the other areas of intellectual property such as trade marks, designs, plant variety rights, copyright and related rights, how important is the patent system in Europe?
5.3 How important to you is the patent system in Europe compared to the patent system worldwide?
5.4 If you are responding as an SME, how do you make use of patents now and how do you expect to use them in future? What problems have you encountered using the existing patent system?
5.5 Are there other issues than those in this paper you feel the Commission should address in relation to the patent system?
These questions must be answered personally, describing how patents affect you, your business, your customers. A generic answer would not have much influence. You can answer this question in your own language, the Commission will translate it. Be careful with the scale of 1 to 10.